The thing that makes the most sense to me (if it is Erdrick) would be to do it in a way where they know there will be a lot of eyes on it.
The whole point of the choice, aside from pleasing and appealing to Japanese fans, is to make Dragon Quest more visible in the west.
One thing that franchise has had a god awful track record of is segregating itself from associations that would bring attention to it here.
Consider the following:
Monster Hunter: World's reveal at E3 2017. It FORCED people to pay attention to Monster Hunter for a change since it was part of Sony's E3 presentation.
And guess what Dragon Quest doesn't do? That.
Which is a big reason as to why westerners are only ignorantly aware of the basics about it (Akira Toriyama does the art, they're turn-based RPGs, and can probably recognize what a Slime is).
That kind of general basics is the same as how westerners were with Monster Hunter (you hunt monsters, the Kirin armor for chicks is hot, and you have cats who help you) until Monster Hunter: World, which gave the game a platform to be seen by people who typically would not see it.
Not to mention they put proper money and effort into actually advertising it in the west.
When it comes to Dragon Quest, the segregation of "this is such a big thing here so we don't need to do this as part of someone else's thing" is a terrible mindset that's held it back here. Square Enix controls its reveals and news in such a way that typically only Dragon Quest fans will already be paying attention to in the first place. Someone who isn't already into Dragon Quest typically isn't going to tune in to a Japanese live stream event for Dragon Quest.
How they don't realize this is beyond me.
This is without even mentioning how terrible Square Enix is at advertising (more like lack thereof) in the west when it comes to this series.
The best way to get people to pay attention to Dragon Quest overseas?
FORCE them to have to pay attention to it.
Play along well with Sony or Nintendo and get a game on a main stage/presentation.
In this case, if there is a Nintendo Direct that'll reveal Erdrick, the best way to do this is a three-pronged attack in the same Direct:
► Formally announce Dragon Quest XI S for the west (they'd already said it would've came out here with our PS4 and PC versions had it not been for Unreal Engine 4 issues, and there's even a localization botch left on a loading screen for both versions which uses Nintendo Switch button terminology). I feel like the only reason why we suspiciously didn't get it formally revealed here along with the Japanese version at Jump Festa was solely because they're being smart and actually waiting for this specific Nintendo Direct that would reveal Erdrick.
► Speaking of which, obviously announcing Erdrick as a Fighters Pass DLC character.
► End with announcing Dragon Quest: The Erdrick Trilogy (a compilation release of Dragon Quest I, II, and III) to be released worldwide for Nintendo Switch (hopefully releasing it on PS4 and PC as well for further expanse to build off the current players who played XI). And if they wanna go balls out and double down? Announce a compilation of Dragon Quest IV, V, and VI as Dragon Quest: The Zenithian Trilogy, too.
Oh, and when Dragon Quest XI S comes out...NINTENDO BETTER PUT OUT COMMERCIALS FOR IT.
I actually have faith that they will here given how Nintendo has handled third-party support in their commercials for the Switch.
If Nintendo's publishing Dragon Quest XI S, which I have little to no reason to believe they won't when you consider the history of Dragon Quest localization's publishing, then they will.
So ya know, Dragon Quest XI got literally no commercials in the west.
Yes. Despite the fact that Square Enix openly acknowledged that they have to branch out and can't count on Final Fantasy forever after the end of 2017 fiscal year, mentioning they need to focus on NieR and Dragon Quest, with the latter being something they hope to make bigger here.
NieR: Automata's unexpected success and Dragon Quest XI's releases helped them a whole lot when they were in the hole from Final Fantasy XV (which they still are, hence the moving on from that game and gutting the DLC plans).
So, if they're ACTUALLY serious about branching out and letting Dragon Quest shine due to the Smash connection/cross-promotion, they need to realize the last thing you need to do is hand it a flashlight with dead batteries while sending it out in the dark.
I have a helluvalot more faith in the Dragon Quest connection with Nintendo for breaking the series into the market in a bigger way here for a change between a character in Smash, Dragon Quest XI S being advertised properly, and the prospect of older entries being re-released.